How We Closed a $3.5 Million Cash-Out Refinance on a Primary Residence Using a Bank Statement Loan

June 11, 2026
Steve Hasani
Mortgage News

When a high-net-worth borrower in San Diego came to us needing $3.5 million in cash from their primary residence, they had already been turned away by traditional lenders. Their income was strong, their assets were substantial, but their tax returns told a different story — one that conventional underwriting simply does not accommodate. That is where First Liberty Funding Corp comes in.

This is the story of how our team navigated credit challenges, a low appraisal, and complex Non-QM guidelines to deliver exactly what our client needed: full cash-out proceeds at a competitive rate.

What Is a Bank Statement Loan and Who Is It For?

A bank statement loan is a Non-QM (Non-Qualified Mortgage) product designed for self-employed borrowers, business owners, real estate investors, and high-income earners whose tax returns do not reflect their true cash flow. Instead of W-2s or tax returns, lenders like First Liberty Funding qualify borrowers using 12 to 24 months of personal or business bank statements.

This program is ideal for:

Self-employed professionals and entrepreneurs
Freelancers, consultants, and gig-economy earners
Real estate investors with depreciation write-offs
Business owners who reinvest heavily into their companies

If you have been told “no” by a traditional bank, a bank statement loan could be the solution you have been looking for. Learn more about Non-QM lending options from the Consumer Financial Protection Bureau to understand how alternative income documentation works.

The Scenario: $3.5 Million Cash-Out on a Primary Residence

Our client owned a high-value primary residence in San Diego and needed to access $3.5 million in equity. The goal was straightforward. The path to get there was not.

Here is what we were working with:

Loan type: Cash-out refinance on a primary residence
Income documentation: Bank statement program (self-employed borrower)
Desired cash-out amount: $3.5 million
Property type: Primary residence, luxury tier
Market: San Diego, CA

Two major obstacles stood between our client and the closing table.

Challenge 1: Credit Score Needed Work

When our client first came to us, their credit score was not positioned to qualify for the best available rate on a jumbo Non-QM loan of this size. At this loan amount, even a small rate difference translates into tens of thousands of dollars annually — so getting the credit right was not optional.

Rather than tell our client to come back later, our team worked directly with them on a targeted credit improvement strategy. This included identifying and addressing negative items that were dragging down the score, optimizing credit utilization across open accounts, and ensuring all reporting was accurate. Within the appropriate timeframe, we brought the score to a level that unlocked significantly better pricing.

This is a step most brokers skip. At First Liberty Funding, we believe the loan process starts the moment a borrower walks in the door, not the moment they are “ready.” Our job is to help get them there.

The result: An improved credit profile that qualified our client for the most competitive rate tier available under the bank statement program.

Challenge 2: The Appraisal Came In $2.5 Million Below Estimated Value

This was the bigger obstacle, and frankly, the one that would have killed the deal at most shops.

After the initial appraisal was completed, the property came in $2.5 million below the value our client and our team had anticipated. On a cash-out refinance, the appraised value is everything. It determines the maximum loan amount, the loan-to-value ratio, and whether the deal can even close. A $2.5 million shortfall on a transaction this size was a serious problem.

We immediately initiated a Reconsideration of Value (ROV) — a formal process in which we submitted a documented challenge to the appraisal, supported by stronger comparable sales, market data, and specific property attributes the original report had either underweighted or overlooked.

Our team compiled:

Superior comparable sales within a tighter radius
Recent closed sales that better reflected the property’s finishes and square footage
Market trend data supporting price appreciation in the subject neighborhood
A detailed rebuttal addressing the original appraiser’s methodology

The reconsideration was submitted, reviewed, and accepted. The appraised value was revised upward to a number that fully supported the $3.5 million cash-out request.

This is exactly the kind of advocacy that separates a broker who gets deals done from one who sends borrowers an apology email.

The Outcome: Full Cash-Out at a Great Rate

After navigating both challenges, we closed the loan. Our client received:

The full $3.5 million in cash-out proceeds
A competitive rate made possible by the improved credit score
A bank statement loan structure tailored to their income documentation
A smooth path to closing with no last-minute surprises

This is what Non-QM lending looks like when it is done right.

Why Non-QM Lending Requires a Specialist

Non-QM loans are not all created equal, and neither are the brokers who originate them. Products like bank statement loans, DSCR loans, asset depletion loans, and jumbo non-warrantable condo financing each come with their own overlays, underwriting nuances, and lender-specific guidelines. Mistakes in this space are expensive.

At First Liberty Funding Corp, Non-QM is our specialty. We work with a curated network of wholesale lenders across California and know which programs fit which scenarios before we ever submit a file. That expertise is what allowed us to fight through a low appraisal and a credit challenge — and still close.

According to the Mortgage Bankers Association, Non-QM originations have continued to grow as more self-employed and high-net-worth borrowers seek alternatives to conventional financing. If you fall outside the Fannie Mae and Freddie Mac box, you are not alone, and you have options.

Ready to Explore a Cash-Out Refinance?

Whether you are looking to access equity in your primary residence, purchase a new investment property, or refinance a high-value home, our team is ready to build a strategy around your specific situation.

Contact First Liberty Funding Corp today to speak with a Non-QM specialist. We serve borrowers throughout San Diego and across California.

First Liberty Funding Corp | NMLS #305360 San Diego, CA

Disclaimer: This blog post is intended for informational purposes only and does not constitute financial, legal, or mortgage advice. Loan programs, rates, terms, and eligibility requirements are subject to change without notice and vary based on individual borrower qualifications, property type, lender guidelines, and market conditions. All loans are subject to credit approval and underwriting review. The success story described above reflects a specific past transaction and is not a guarantee of future results. Not all borrowers will qualify for the same loan terms or outcomes. First Liberty Funding Corp is a licensed mortgage broker, NMLS #305360. This is not a commitment to lend. Please consult with a licensed mortgage professional to discuss your individual financial situation.